What changed in this filing

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Item 1. Financial Statements

2023-08-04 compared with 2023-05-05 · 46 added, 35 removed, 331 unchanged (20% of the section changed)

1 unchanged sentence

GRAYSCALE BITCOIN TRUST (BTC)

STATEMENTS OF ASSETS AND LIABILITIES (U N

STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

(Amounts in thousands, except Share and per Share amounts)

Investment in Bitcoin, at fair value (cost $ 7,123,444 and $ 7,158,661 as of March 31, 2023 and December 31, 2022, respectively)

Investment in Bitcoin, at fair value (cost $ 7,088,012

and $ 7,158,661

as of June 30, 2023 and December 31, 2022, respectively)

Sponsor’s Fee payable, related party

11 unchanged sentences

(Amounts in thousands, except quantity of Bitcoin and percentages)

March 31, 2023

June 30, 2023

Quantity of Bitcoin

11 unchanged sentences

(Amounts in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Investment income:

7 unchanged sentences

Net increase (decrease) in net assets resulting from operations

See accompanying notes to the unaudited financial statements.

See accompanying notes to

unaudited financial statements.

GRAYSCALE BITCOIN TRUST (BTC)

1 unchanged sentence

(Amounts in thousands, except change in Shares outstanding)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Increase (decrease) in net assets from operations:

50 unchanged sentences

Authorized Participants of the Trust are the only entities who may place orders to create or, if permitted, redeem Baskets.

Genesis Global Trading, Inc.

(“Genesis” or, in such capacity, an “Authorized Participant”), a registered broker-dealer and wholly owned subsidiary of DCG, was the only Authorized Participant prior to October 3, 2022, and was party to a participant agreement with the Sponsor and the Trust.

Effective October 3, 2022, Grayscale Securities, LLC (“Grayscale Securities” or, in such capacity, an “Authorized Participant”), a registered broker-dealer and wholly owned subsidiary of the Sponsor, is the only Authorized Participant, and is party to a participant agreement with the Sponsor and the Trust.

As a result, since October 3, 2022, Genesis ceased acting as an Authorized Participant of the Trust, but serves as a Liquidity Provider to Grayscale Securities.

Grayscale Securities, LLC (“Grayscale Securities” or, in such capacity, an “Authorized Participant”), a registered broker-dealer and wholly owned subsidiary of the Sponsor, is the only Authorized Participant, and is party to a participant agreement with the Sponsor and the Trust.

Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor.

The Authorized Participant(s) may engage additional Liquidity Providers at any time.

Genesis Global Trading, Inc.

(“Genesis”), a wholly owned subsidiary of DCG, serves as a Liquidity Provider to Grayscale Securities .

The custodian of the Trust is Coinbase Custody Trust Company, LLC (the “Custodian”), a third-party service provider.

9 unchanged sentences

Summary of Significant Accounting Policies

In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2023 and December 31, 2022 and results of operations for the three months ended March 31, 2023 and 2022 have been made.

In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of June 30, 2023 and December 31, 2022 and results of operations for the three and six months ended June 30, 2023 and 2022 have been made.

The results of operations for the periods presented are not necessarily indicative of the results of operations expected for the full year.

38 unchanged sentences

Realized gains and losses are calculated using the specific identification method.

Realized gains and losses are recognized in connection with

transactions including settling obligations for the Sponsor’s Fee in Bitcoin.

Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor’s Fee in Bitcoin.

Fair Value Measurement

14 unchanged sentences

Amount at Fair

March 31, 2023

June 30, 2023

Investment in Bitcoin

6 unchanged sentences

Bitcoin is held by the Custodian on behalf of the Trust and is carried at fair value.

As of March 31, 2023 and December 31, 2022 the Trust held 628,932.20027878 and 632,041.52945742 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 28,467.79 and $ 16,556.29 on March 31, 2023 and December 31, 2022, respectively, using the price provided at 4:00 p.m., New York time, by the Digital Asset Exchange Market considered to be the Trust’s principal market (Coinbase Pro).

As of June 30, 2023 and December 31, 2022 the Trust held 625,803.87494694

and 632,041.52945742

Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 30,361.94

and $ 16,556.29

on June 30, 2023 and December 31, 2022, respectively, using the price provided at 4:00 p.m., New York time, by the Digital Asset Exchange Market considered to be the Trust’s principal market (Coinbase).

The following represents the changes in quantity of Bitcoin and the respective fair value:

17 unchanged sentences

Net realized gain on investment in Bitcoin

Ending balance as of March 31, 2023

Ending balance as of June 30, 2023

625,803.87494694

Creations and Redemptions of Shares

At March 31, 2023 and December 31, 2022, there were an unlimited number of Shares authorized by the Trust.

At June 30, 2023 and December 31, 2022, there were an unlimited number of Shares authorized by the Trust.

The Trust creates (and, should the Trust commence a redemption program, redeems) Shares from time to time, but only in one or more Baskets.

2 unchanged sentences

dollar value of accrued but unpaid fees and expenses of the Trust, by (y) the number of Shares outstanding at such time and multiplying the quotient obtained by 100.

Each Share represented approximately 0.0009 of one Bitcoin at both March 31, 2023 and December 31, 2022.

Each Share represented approximately 0.0009 of one Bitcoin at both June 30, 2023 and December 31, 2022.

The decrease in the number of Bitcoin represented by each Share since inception is primarily a result of the periodic withdrawal of Bitcoin to pay the Sponsor’s Fee.

23 unchanged sentences

If the Trust were not properly classified as a grantor trust, the Trust might be classified as a partnership for U.S.

income tax purposes.

federal income tax purposes.

However, due to the uncertain treatment of digital assets, including forks, airdrops and similar occurrences for U.S.

12 unchanged sentences

threshold are recorded as a tax benefit or expense in the current period.

As of, and during the periods ended March 31, 2023 and December 31, 2022, the Trust did not have a liability for any unrecognized tax amounts.

As of, and during the periods ended June 30, 2023 and December 31, 2022, the Trust did not have a liability for any unrecognized tax amounts.

However, the Sponsor’s conclusions concerning its determination of “more-likely-than-not”

1 unchanged sentence

analyses of and changes to tax laws, regulations and interpretations thereof.

The Sponsor of the Trust has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions related to federal, state and local income taxes existed as of March 31, 2023 or December 31, 2022.

Related Parties

1 unchanged sentence

DCG, Genesis, Genesis Global Holdco, LLC, Grayscale, Grayscale Securities, and CoinDesk Indices, Inc.

As of March 31, 2023 and December 31, 2022, 36,066,527 and 36,065,470 Shares of the Trust were held by related parties of the Trust, respectively.

As of June 30, 2023 and December 31, 2022, 36,069,847

and 36,065,470 Shares of the Trust were held by related parties of the Trust, respectively.

The Sponsor’s parent, an affiliate of the Trust, holds a minority interest in Coinbase, Inc., the parent company of the Custodian, that represents less than 1.0 % of Coinbase Inc.’s ownership.

7 unchanged sentences

dollar value of Bitcoin is determined by reference to the Digital Asset Exchange Market that the Trust considers its principal market as of 4:00 p.m., New York time, on each valuation date.

The Trust held no Incidental Rights or IR Virtual Currency as of March 31, 2023 and December 31, 2022.

No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three months ended March 31, 2023 and 2022.

The Trust held no Incidental Rights or IR Virtual Currency as of June 30, 2023 and December 31, 2022.

No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three and six months ended June 30, 2023 and 2022.

As partial consideration for receipt of the Sponsor’s Fee, the Sponsor is obligated under the Trust Agreement to assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including marketing fees;

12 unchanged sentences

dollars or other fiat currencies at the Actual Exchange Rate or (y) when the Sponsor incurs such expenses on behalf of the Trust, cause the Trust (or its delegate) to deliver such Bitcoins, Incidental Rights and/or IR Virtual Currency in kind to the Sponsor in satisfaction of such Additional Trust Expenses.

For the three months ended March 31, 2023 and 2022, the Trust incurred Sponsor’s Fees of $ 71,084,974 and $ 131,024,620 , respectively.

As of March 31, 2023 and December 31, 2022, there were no accrued and unpaid Sponsor’s Fees.

For the three months ended June 30, 2023 and June 30, 2022 the Trust incurred Sponsor’s Fees of $ 87,600,801 and $ 103,668,521 , respectively.

For the six months ended June 30, 2023 and 2022, the Trust incurred Sponsor’s Fees of $ 158,685,775 and $ 234,693,141 , respectively.

As of June 30, 2023 and December 31, 2022, there were no accrued and unpaid Sponsor’s Fees.

In addition, the Sponsor may pay Additional Trust Expenses on behalf of the Trust, which are reimbursable by the Trust to the Sponsor.

For the three months ended March 31, 2023 and 2022 the Sponsor did no t pay any Additional Trust Expenses on behalf of the Trust.

For the three and six months ended June 30, 2023 and 2022 the Sponsor did no t pay any Additional Trust Expenses on behalf of the Trust.

On March 10, 2021, the Board of the Sponsor (the “Board”) approved the purchase by DCG, the parent company of the Sponsor, of up to $ 250 million worth of Shares of the Trust.

13 unchanged sentences

From March 10, 2021 through June 30, 2022, DCG purchased a total of $ 771.8 million worth of Shares of the Trust under this authorization.

From July 1, 2022 through March 31, 2023, DCG did not purchase any Shares of the Trust under this authorization.

From July 1, 2022 through June 30, 2023 DCG did not purchase any Shares of the Trust under this authorization.

Risks and Uncertainties

22 unchanged sentences

For example, it may become more difficult for Bitcoin to be traded, cleared and custodied as compared to other digital assets that are not considered to be securities, which could, in turn, negatively affect the liquidity and general acceptance of Bitcoin and cause users to migrate to other digital assets.

As such, any determination that Bitcoin is a security under federal or state securities laws may adversely affect the value of Bitcoin and, as a result, an investment in the Shares.

To the extent that Bitcoin is determined to be a security, the Trust and the Sponsor may also be subject to additional regulatory requirements, including those under the Investment Company Act of 1940, and the Sponsor may be required to register as an investment adviser under the Investment Advisers Act of 1940.

If the Sponsor determines not to comply with such additional regulatory and registration requirements, the Sponsor will terminate the Trust.

Any such termination could result in the liquidation of the Trust’s Bitcoin at a time that is disadvantageous to shareholders.

As such, any determination that Bitcoin is a security under federal or state securities laws may adversely affect the value of Bitcoin and, as a result, an

investment in the Shares.

In addition, if Bitcoin is in fact a security, the Trust could be considered an unregistered “investment company” under the Investment Company Act of 1940, which could necessitate the Trust’s liquidation.

In this case, the Trust and the Sponsor may be deemed to have participated in an illegal offering of securities and there is no guarantee that the Sponsor will be able to register the Trust under the Investment Company Act of 1940 at such time or take such other actions as may be necessary to ensure the Trust’s activities comply with applicable law, which could force the Sponsor to liquidate the Trust.

To the extent a private key required to access a Bitcoin address is lost, destroyed or otherwise compromised and no backup of the private keys are accessible, the Trust may be unable to access the Bitcoin controlled by the private key and the private key will not be capable of being restored by the Bitcoin Network.

6 unchanged sentences

Financial Highlights Per Share Performance

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Per Share Data

17 unchanged sentences

Subsequent Events

As of the close of business on May 1, 2023, the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 27,833.06 per Bitcoin.

As of the close of business on August 1, 2023, the fair value of Bitcoin determined in

accordance with the Trust’s accounting policy was $ 29,264.00 per Bitcoin.

There are no known events that have occurred that require disclosure other than that which has already been disclosed in these notes to the financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements